Do group dynamics influence social capital gains among microfinance clients? Evidence from a randomized experiment in urban India


Journal Article

© 2014 by the Association for Public Policy Analysis and Management. As an intrinsic part of the classic microfinance model, group meetings are intended to employ social capital to ensure timely repayment. Recent research suggests that more frequent meetings can increase social capital among first-time clients. Using randomized variation in group meeting frequency for 174 microfinance groups in India, we demonstrate that social capital gains associated with more frequentmeetings continue to accrue across multiple lending cycles. However, these effects are reduced when group members differ in their borrowing history. In addition, clients who start with low levels of empowerment report higher social capital gains when matched with similar clients. We discuss how current microfinance policy debates overlook the creation of social capital, including through repayment meeting frequency, and we encourage regulators to undertake a holistic understanding of microfinance's impacts.

Full Text

Duke Authors

Cited Authors

  • Feigenberg, B; Field, E; Pande, R; Rigol, N; Sarkar, S

Published Date

  • January 1, 2014

Published In

Volume / Issue

  • 33 / 4

Start / End Page

  • 932 - 949

Electronic International Standard Serial Number (EISSN)

  • 1520-6688

International Standard Serial Number (ISSN)

  • 0276-8739

Digital Object Identifier (DOI)

  • 10.1002/pam.21790

Citation Source

  • Scopus